Small Parcel Shipping: Should I Switch to a Regional Carrier?

Small Parcel Shipping: Should I Switch to a Regional Carrier?

With national shipping carriers like FedEx and UPS raising their rates annually, many parcel shippers are looking for alternatives.  Many have found that using a combination of carriers best suits their shipping needs while others are getting the lowest rates by using a regional carrier, based on destination location.

Leveraging Carriers

Some carriers are able to use both national and regional carriers to take advantage of the best discounts.   As a general rule, businesses that spend over $10 million in net transportation are good candidates for using multiple carriers.  Larger shippers have the ability to take advantage of a regional carrier’s savings and still maintain 10-15% penetration within their target revenue tier.   The savings realized with the regional carrier needs to be less than the loss of discounts for volume with the national carrier.

Shippers at less than the $10 million shipping threshold do not do enough business to be able to negotiate with both national and regional carriers.   In that case, a single carrier is the best way to get the lowest rates.

Regional Carrier Advantages

The move to a regional carrier can offer many benefits.  Lower shipping costs is usually the most common reason that shippers use a regional carrier.   In addition, there are other benefits that shippers can enjoy.

Lower Costs:  Shipping rates may be lower with a regional carrier, sometimes as much as 10-40% lower than base rates of national carriers like UPS and FedEx.  Accessorial charges and lower minimums are usually lower as compared to their national counterparts.

Faster Delivery:   With an on-time delivery average of around 99%, regional carriers are a good choice if shipping speed matters to your customers.   This is a good solution for businesses that have most of their customer base in one area.   Being able to offer same- or next-day shipping can help your company remain competitive.

Expanded Next-Day Service:  Since the delivery area is concentrated, more of your customers can get their orders fast for a ground delivery price.

Exceptional Service:  Compared to national carriers, regional carriers offer a better service for customers with personalized attention.   They are able to resolve any issues quickly.

Flexibility:  Regional carriers can offer more flexible shipping options.   For example, because they are not dealing with international shipments, shippers can get a later pickup time and still have their package delivered within two days.

Considerations

When deciding on using a regional carrier, there are a few important questions to consider:

  • What is your coverage area (by zip code)?
  • What is your delivery timeframe?
  • What is your on-time delivery percentage?
  • What are your surcharges?

 

If your business can benefit from a regional carrier, make sure they understand your shipping needs so you can continue to service your customers.  Before making the switch, you might want to rate shop for each coverage area to see how much you can save against your current shipping scenario to guarantee maximum savings.